Reports are emerging that the Austin, Texas-based mining hardware provider CoinTerra is defaulting on mining contract obligations and may be insolvent.
A reddit commenter writes that he e-mailed CoinTerra support because he did not receive his weekly payout for his mining contracts. He received a reply quoting CoinTerra’s legal department that debt holders have perfected liens on CoinTerra assets, including servers. The company thus cannot make payments until the creditors make a decision on a proposed plan.
Other commenters have cited similar experiences as well. Coin Fire says it spoke to employees saying the company is on the verge of falling apart. They added that company attorneys may have found a solution but it would likely involve declaring bankruptcy. Another said that even if the company is rescued, some customers are likely to experience missed payments on contracts.
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Last year, the Better Business Bureau issued a consumer warning against CoinTerra after receiving over 40 complaints that the company has not delivered refunds.
DC Magnates has not yet been able to confirm the reports. If true, CoinTerra’s collapse would not be the first in the industry, which appears to be not nearly as lucrative today as it was one year ago.
San Francisco-based HashFast declared bankruptcy last year. Butterfly Labs, while technically not bankrupt, faces legal action and was temporarily forced into receivership over allegedly fraudulent practices. Several other hardware makers, which have quietly shifted away from selling equipment and toward mining contracts, have also been the subject of alleged wrongdoing and may be next.
A declining bitcoin price has likely exacerbated the unstable financial standing of such companies.